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Recommendation 1: Generative artificial intelligence must benefit the creative economy
That the Government ensure a) that artificial intelligence systems comply with fair market principles to obtain licences and compensate copyright owners for the use of their works; (b) that artificial intelligence systems comply with transparency, record-keeping and disclosure obligations, such as publicly disclosing the copyright-protected works they use; and c) that no new exceptions from copyright or other intellectual property rights are created.
Recommendation 2: Clarify the exemption at section 32.2(3) in the Copyright Act
That the Government amend the language of the exemption at section 32.2(3) of the Copyright Act to clarify that the exemption only applies where an organization acts “without motive of gain” and to clarify that this has always been the state of the law.
Recommendation 3: Modernize private copying
That the Government amend the Copyright Act to make the private copying regime technologically neutral and confirm the ability of the Copyright Board to set levies for unlicensed private copies made on audio recording media and audio recording devices.
Background
1. SOCAN (Society of Composers, Authors and Music Publishers of Canada) is Canada’s largest rights management organization. SOCAN has over 200,000 songwriter, composer, and music publisher members and clients, and licenses tens of thousands of businesses and organizations across Canada. We also connect more than 4 million creators and publishers worldwide, ensuring they receive fair compensation for their music. SOCAN issues licences for the performing rights and reproduction rights of musical works and collects and distributes royalties to its members and the international rights management organizations with which it has reciprocal agreements.
2. In 2024, SOCAN collected $559 million in licence fees.
Recommendation 1: Generative artificial intelligence must benefit the creative economy
3.In a recent economic study conducted by CISAC (the International Confederation of Societies of Authors and Composers) on generative artificial intelligence (AI) and music creators, it was estimated that under current market conditions, up to 24% of music creators’ revenues could be at risk. It is also estimated that by 2028, generative AI music will account for 20% of traditional music streaming platforms’ revenues and 60% of music libraries’ revenues. This presents a real threat to the sustainability of the Canadian creative economy.
4.This potential loss of revenue to music creators is coupled with the current uncompensated use by generative AI models of virtually all copyright-protected works obtained without licences either from large-scale text and data mining (TDM) activities or from datasets containing unlicensed works. In the CISAC study mentioned above, the market value of generative AI outputs is estimated to reach an annual value of €16 billion by 2028, from less than €1 billion in 2023. Much of this revenue will be generated through substituting generative AI outputs for human-created music. In effect, human creators are currently fueling advances in generative AI models, without sharing in any of the benefits.
5. In order for generative AI to be a net benefit to Canada’s creative economy, two things need to happen: (i) generative AI companies must be required to meet adequate transparency obligations and (ii) music creators must be compensated for the use of their works in developing and operating generative AI models. 6. On the transparency point, it is currently extremely difficult, if not impossible, for music creators to know when and where their creative works have been used. Without this knowledge, music creators cannot effectively exercise or enforce their rights. Transparency over the works ingested and used by generative AI models is critical to supporting the development of a dynamic licensing market. The current lack of transparency from generative AI companies has resulted in a market failure.
7. As a result of this imbalance, generative AI companies must have transparency, record-keeping, and disclosure obligations to ensure that music creators understand how and when their works are used by AI developers and whether that use has been licensed or not. It is a fundamental objective of the Copyright Act that creators receive remuneration for the use of their works. Further, as a question of fundamental fairness, the songwriters whose works are taken by AI companies to build their models deserve to share in the benefits generated by those models. Imposing transparency obligations will encourage AI companies to obtain music creators’ permission through licensing agreements to use their works to program their AI models or for other purposes.
8. Imposing transparency obligations on generative AI companies would set up a foundation to develop a licensing market to ensure appropriate compensation for creators when their works are used. Licensing copyright-protected works is not, and has never been, a barrier to innovation. Engaging in fair licensing practices will ensure that human creativity and labour is respected and compensated while fostering the development of generative AI in a fair and transparent manner.
9. In addition, SOCAN would have serious objections to any proposals to create new exceptions in the Copyright Act to allow the use of creators’ works without consent, credit and compensation. We are only starting to uncover the full potential and implications of AI in the creative sphere. We are also only beginning to understand the potential disruptive effect of AI on the economics of the cultural industries. SOCAN urges the Government to ensure that the policy objectives of the Copyright Act are preserved, namely, to foster creativity and allow creators and their representatives to continue to have the means to control how their works are used, by whom, and on what terms. The legislative balance between user and creator interests must be maintained.
10.It is important that we champion and support the Canadian music industry in the age of generative AI, not only for the development of Canadian songs that reflect Canadian attitudes, opinions, ideas and values, but also to preserve the industry’s important contributions to the entire Canadian economy.
Recommendation 2: Clarify the exemption at section 32.2(3) in the Copyright Act
11.The Copyright Act, at section 32.2(3), provides an exception for the payment of royalties for the public performance of music when the performance is “in furtherance of a religious, educational or charitable object” by a religious, educational or charitable organization. Some organizations rely on this provision as carte blanche for refusing to pay music creators when they perform their music, even when the performances are for an ordinary business purpose. SOCAN has had to pursue legal actions against certain organizations due to the perceived ambiguity with how section 32.2(3) is written.
12.We recommend that the Government amend the Copyright Act to clarify this ambiguity with the following language:
“32.2(3) No religious organization or institution, educational institution and no charitable or fraternal organization shall be held liable to pay any compensation for doing any of the following acts without motive of gain in furtherance of a religious, educational or charitable object: …
32.23(3.1) For greater certainty, it is deemed always to have been the law that no action referred to in section 32.2(3) may be carried out with motive of gain.”
13.The language “motive of gain” exists in the exemption for agricultural exhibitions and fairs in section 32.2(2). This language has been judicially considered by the Supreme Court of Canada and interpreted such that a performance that is “without motive of gain” means that the performers cannot be paid and the exhibitors cannot receive private profit.
Recommendation 3: Modernize private copying
14.The private copying levy has not changed with new technological advances. It only applies to blank compact discs when most current unlicensed private copying is done on devices like smartphones and tablets. If the private copying levy was technologically neutral, Canada’s rights-holders would be compensated over $40 million annually, in contrast to less than $0.5 million today.
15.Canada has been an outlier on private copying, with many of our international trading partners providing technologically-neutral private copying regimes that generate over $1 billion globally. Canadian rights-holders do not share in these international revenues when their works are copied overseas because we do not have a reciprocal levy here.
16.We recommend that the Government amend the Copyright Act to confirm the ability of the Copyright Board to set levies on audio recording devices for unlicensed private copies.
Conclusion
17.The creative industries are an important economic sector in Canada. It is paramount that the Copyright Act continues to serve its objective to foster human creativity and that it continues to provide rights holders with a just reward for their creation.
18.Ensuring a strong copyright framework is critical to help future generations of Canadian music creators and publishers.
19.We thank the Government for the opportunity to contribute to this important process.